Russian Lumber Exports Could be Blocked by Crimea Crisis

By Bill Esler |
Posted:
03/17/2014 8:09AM

Lumber shipments from Russia could be blocked as the U.S. and Europe freeze certain financial transactions following the Crimean vote to leave the Ukraine. How the Russians will respond to whatever roadblocks are thrown up to them is anyone's guess.

Russian Timber Group, one of Russia's largest timber firms, says East Asian markets dominate its sales, with over 50%, the rest to former Soviet countries, various Russian regions, Europe, and Egypt. From January to June 2013, deliveries doubled, primarily due to increased high-quality lumber production at the group’s mills. It is not clear whether financial interests rule in a country that sees its markets governed by fiat.

Some background: Once the world's largest log exporter, Russia moved to limit its log exports by adopting a tariff. The idea, which has been implemented for various commodities in a number of countries - including Canada (plywood) and the U.S. (oil and gas) - is to increase domestic value-added, or to ensure availability of domestic supply. In Russia's case, the intent was to ship greater quantities of more profitable lumber and plywood.

Following the tariffs, log exports fell dramatically, down $2 billion over six years, as Russia's share of globally traded logs fell from 44% in 2006 to 15% in 2013, according to Hakan Ekstrom at Wood Resource Quarterly.

Meanwhile, when Russia avidly sought membership in the World Trade Organization in 2012, it was forced to role back the tariffs. That didn't restore log sales - down $2 billion for the period - while sales of lumber and plywood rose just $300 million during the period.

Russia's share of globally traded logs fell from 44% in 2006 to 15% in 2013. - See more at: http://www.woodworkingnetwork.com/wood/lumber-data-trends/Russian--250649421.html#sthash.tdj6fc8M.dpuf